TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 1693
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....tation, consultancy, commission and warehousing services. The Assessing Officer observed in the assessment order that the case was selected for the reason that "Large payments made under section 194C to persons who have not filed return of income". During the assessment proceedings, the Assessing Officer observed that assessee has made payments of Rs. 4,67,39,654/- towards contract expenses and deducted TDS u/s 194C of the Act on the amount of Rs. 3,26,70,838/-. He further observed that the person to whom the payments were made failed to file the return of income. Therefore, certain details were requisitioned from the assessee, however, the assessee failed to provide the same. In view of non submission of the details as called for, a notice was issued dated 03/12/2019 calling for information. 4. In response, assessee filed letter dated 05/12/2019 and submitted that the liability of the assessee is only to deduct TDS as per the provisions of Income Tax Act, 1961, therefore the assessee fulfilled his duty. The payee filed the return of income or not, it is not the concern of the assessee in any manner. After considering the submissions of the assessee, the Assessing Officer observed....
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.... vendors, the annexure 6 contain Invoices raised by the appellant and the Annexure 7 contains the details of warehousing charges paid by the appellant to various parties. The Annexure 8 contains details of TDS deducted and deposited u/s. 194C of the Act. In these details, the appellant has given expenses of Rs. 58,72,996/- covered u/s. 194C of the Act giving the PAN, name of the party with address, nature of expenses, amount and TDS deducted. Apart from these details the appellant has not furnished any details of the contract expenses covered u/s.194C of the Act. It is seen from the assessment order that the total expenses covered u/s. 194C of the Act is at Rs. 4,67,39,654/-, whereas the appellant has furnished the details of expenses covered u/s. 194C of the Act of Rs. 58,72,996 only. It is very much evident from the details submitted by the appellant on 29/11/2019 that the Assessing Officer has called for the details of expenses covered u/s 194C of the Act and the appellant has not furnished the complete details. During the appellate proceedings, the assessee was given sufficient opportunity to furnish the submission along with supporting documentary evidence but the appellant ha....
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....ng the name of the party to whom paid, their PAN, amount and nature of expenses. If these details were submitted during the assessment proceedings, the Assessing Officer could have carried out appropriate enquiry regarding the genuineness of the expenses. It appears that the assessee has deliberately not provided the details during the assessment proceedings as well during the appellate proceedings to avoid any further verification. In the circumstances, the ground raised by the assessee that the entire addition made u/s. 69C of the Act be deleted is not acceptable.. 8.4 It is seen from the Paper Book that the appellant has provided the details of TDS deducted and deposited u/s. 194C of the Act in respect of expenses of Rs. 58,72,996/-. In these details, the appellant has provided the name of the party, address and PAN and therefore, it was incumbent on the Assessing Officer to verify the genuineness of the expenses by issuing summon or notice u/s. 133(6) of the Act to these parties. However, the Assessing Officer has not carried out any independent enquiry regarding the genuineness of expenses of Rs. 58,72,996/-. Merely on the ground that the parties to whom payments made are no....
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....ircumstances of the case and in law, the Ld. CIT(A) has erred in sustaining the disallowance made by the Ld. AO despite the fact that the Ld. AO had failed to mention as to which parties had not filed their returns which the Ld. AO seemed to consider as bogus transaction bogus parties. 7. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in sustaining the disallowance made by the Ld. AO, for the reason that the persons to whom payment was made are non-filers of return despite the fact that payment has been made through banking channels and is backed by invoices. 8. That the penalty proceedings initiated under section 271AAC of the Act are invalid. 9. That on the facts and circumstances of the case and in law, the Ld. CIT(A) have erred in sustaining the interest u/s 234A, 234B, 234C and 234D of the Act. 10. That the grounds of appeal are independent and without prejudice to each other." 7. At the time of hearing, the Ld. AR submitted elaborately before us and also filed a written submissions, which is reproduced as under:- "1. SOURCE ESTABLISHED AS PAYMENTS DULY RECORDED IN BOOKS OF ACCOUNT AND MADE THROUGH BANKING CHANNEL OUT OF FUNDS S....
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....sequently, the expenditure was disallowed as unexplained expenditure under Section 69C of the Act. The source of such expenditure or part thereof is not in dispute. What is in dispute is the genuineness of incurring the expenditure. In the absence of any allegation towards unexplained source of expenditure, Section 69C does not apply at all. 4. NO DEFECT POINTED OUT IN BOOKS. BOOKS NOT REJECTED AND GROSS PROFIT ACCEPTED: i. The books of account of the Assessee have not been discarded nor has any defect been found. ii. Nowhere has it been found that Assessee has made purchases outside the books; iii. The entire finding of the Ld. AO and the Ld. CIT (A) hinges upon the fact that the expenses under consideration are paid to bogus parties and the genuineness of the expenditure is in doubt without even appreciating that if the source of expenditure are from the books and through banking channel, then how such expenditure can be treated as un accounted. iv. Since gross profit has been accepted including the trading account then no such addition can be made. v. No discrepancy in books found by the auditor-refer page 6, 25 of paperbook 5. SECTION 69C IS A DEEMING FICTION AND ....
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....ccasion to apply Section 69C of the Act can arise. The Tribunal further holds that Section 69C of the Act would not be applicable to the facts of the present case as there is no evidence of any unaccounted expenditure. The difference was only on account of estimation of the value of Work in Progress by the site engineers in November, 2008 and actually arriving at the value on physical verification which is reflected in the return of Income as on 31.3.2009. In the above circumstances, no occasion to apply Section 69C of the Act would arise. 7... In the aforesaid facts, unless it is first established by the Revenue that there is unexplained expenditure, no occasion to apply Section 69C of the Act can arise. The Revenue has not challenged the concurrent findings of the CIT (A) as well as of the Tribunal that the Work in Progress as disclosed during the time of search was on provisional basis and it was taken into consideration while determining the Work in Progress as on 31.3.2009. The proposed question that the Tribunal held that there is a difference in the book value and the physical value of the Work in Progress is factually not correct. We did point out this to the counsel for ....
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....e itself. It Is an admitted position that the expenditure was shown by the assessee in its regular books of accounts and it is because of this reason that the Income-tax Appellate Tribunal had observed: "As the expenditure was accounted in the regular books, the source is obviously explained. The provisions of Section 69C are not applicable as there was no unaccounted expenditure." 6. What the Assessing officer attempted to do was to go into the authenticity of the expenditure and he returned a finding that the expenditure was not authenticated by vouchers and consequently, he added the said expenditure as unexplained expenditure under Section 69C. We are in agreement with the observations and findings of the Commissioner of Income-tax (Appeals) as well as that of the Income tax Appellate Tribunal that this is not a case which falls under Section 69C. Clearly. Section 69C refers to the source of the expenditure" and not to the expenditure itself. Consequently, the Assessing Officer was clearly wrong in treating the said expenditure as unexplained expenditure under Section 69C of the said Act and the lower appellate authorities were right in their conclusions in deleting the said ....
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.... discrepancy has been found, then no addition on account of unexplained purchases can be made, because nowhere it has been found that assessee has made purchases outside the books. The entire finding of the Ld. CIT (A) hinges upon the fact that there was material indicating purchase under consideration are bogus without even appreciating that if the source of purchases are from the books and through account pavee cheque, then how such purchases can be treated as un accounted. Since gross profit rate and gross profit has been accepted including the trading account then no such addition can be made. In the result on merits addition made by the AO is deleted and consequently assessee's appeal is allowed." g. BABCOCK POWER (OVERSEAS PROJECTS) LTD. v. DCIT [20031 131 TAXMAN 86 (DELHI) (MAG) "7....... We have also seen further that whatever salaries were paid by the asses-see, they are accounted for in the regular books of accounts and no defect of any kind was pointed out by the Assessing Officer in the books of account maintained by the assessee in due course of business. Therefore, in view of all these facts and circumstances, we hold that the CIT (Appeals) was not justified i....
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.... the Assessing Officer and the CIT (Appeals) committed an error in adding the aforesaid amount in the income of the appellant-assessee under Section 68 of the Act. 18. In view of the above, when the said income cannot be added under Section 68 of the Act and the Tribunal was not competent to make the said addition under Section 69-A of the Act, the TANVI entire order of the Tribunal stand vitiated in law." Hence, from the aforesaid, it is clear that the addition made as unexplained expenditure is not sustainable in law and the Hon'ble Income Tax Appellate Tribunal cannot change the section to tax it under any other provision of the Act. This is as per the binding decision of the Jurisdictional and various other decisions in the matter. 11. GROUND NO. 4. 1 AND 2: THE LD. CIT(A) FAILED TO CONSIDER THE EVIDENCE FILED-OUT OF 3 PAGES OF ANNEXURE TOTALLING TO Rs. 3.26.70.838/- ONLY FIRST PAGE TOTALLING TO RS. 58.72.996 WAS CONSIDERED: 1. In spite of the evidence filed before both the Ld. AO and the L.d. CIT(A), the Ld. CIT(A) failed to even record that evidence is filed before them and have proceeded on Incorrect facts and findings and by disregarding the evidences/details file....
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.... the payment was made to bogus parties. The Ld. AO had failed to mention as to which parties had not filed their returns which the Ld. AO seemed to consider as bogus transaction bogus parties. 8. On the other hand, the Ld. DR submitted that the case of the assessee was selected for scrutiny mainly on the basis of large amount of TDS deducted u/s 194C of the Act and none of the deductees have filed their return of income. Since, none has filed their return of income, the assessee has not proved the genuineness of the transaction. In this regard, he brought to our notice findings in the assessment order wherein AO has found that the genuineness of the transactions were not proved, therefore, he submitted that the Assessing Officer is justified to make the addition u/s 69C of the Act. He also brought to our notice findings of the Ld. CIT(A) at para 8.2 to 8.4 of the appellate order and he submitted that the Ld. CIT(A) has analyzed the transactions and rightly allowed the appeal to the extent of details submitted the assessee. In this regard, he relied on the decisions of the Hon'ble Karnataka High Court in the case of P. M. Abdulla vs. ITO [2016] 380 ITR 125 (Kar.) and brought to our....
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....e Assessing Officer came to the conclusion that the genuineness of the transactions are not proved. With the above observations, the Assessing Officer has not made any verification of the transactions and proceeded to disallow the whole amount of expenditure claimed by the assessee, however, we observed that the Ld. CIT(A) has acknowledged the transactions and partly allowed by referring to first page of the Explanation submitted by the assessee and restricted the claim of the assessee to the extent of the information submitted before him/ to the extent observed by him. However, it is brought to our notice that the assessee has submitted the details of tax deducted at source before the CIT(A), which contained in three pages, which was also submitted before AO also, the same are placed at page 93 to 95 of the PB in which assessee has furnished the details of PAN, name, amount, TDS deduction, their addresses and nature of expenses claimed by the assessee. We have noticed that the assessee has provided all the details of the deductees and some of the deductees are prominent service provider like DTDC, First Flight and other private service providers. Majority of the expenditures claim....
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.... 29 ANSPK0563D LOKESH KUMAR 107,633 1,077 30 AABCD1439Q DHANAWAT CLEARING AND CARRIERS PVT LTD 90,366 1,809 31 CVGPS0426M ARTH PACKERS 89,700 897 32 AAACI9505M INSIGHT INDIA PRIVATE LIMITED 87,424 1,749 33 BKZPD7519M ANIRUDH DAS 74,500 745 34 AAECS1548J SCHINDLER INDIA PRIVATE LIMITED 73,289 1,466 35 ACEPD1401C ABANIDAS 71,600 716 36 CBAPR9202C HANSRAJ 66,800 668 37 CDBPD0259G GAUTAM DAS 63,000 630 38 AFTPA2789N SALOM TEMPO SERVICE 60,300 603 39 BGNPD2548A MANAB DEKA 59,000 590 40 AATPS3308N JET ROADWAYS 57,200 672 41 BLCPS5351Q SHARMA ROADLINES 55,900 559 42 BAAPD8779C JYOTIMOI DEORI 55,600 556 43 AGGPS7197E RAMDULALSAHA 41,921 423 44 AILPN5414G SKNASIRUDDIN 41,000 410 45 BJMPC7018J CNS TRANSPORTS 37,300 373 46 AABCL6633J LIONS WORKFORCE SOLUTIONS 1 PVT LTD 24,000 480 11. From the above chart, it can be seen that deductees who are in the capacity of individuals, who have provided services are in the range of 500 thousand to 24 thousand. As per the provisions of section 194C threshold limit is at Rs. 1 lakh per annum or Rs. 30,000/- per transactions. By considering the earlier discussio....